The document provides an overview of ecommerce basics from its origins in 1979 to modern trends. It discusses the standard ecommerce process involving shopping carts, payment gateways, merchant accounts and banks. It also covers using third party processors and the importance of security protocols like SSL for online transactions. The document aims to educate web developers on foundational ecommerce concepts.
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Nathan Ingram! @nathaningram
Ecommerce 101
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Who is this guy?
Nathan Ingram
Freelance Web Developer since 1995
Instructor, WebDesign.com
NathanIngram.com
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Coupon Code
wpyall25!
Good for 25% off anything you want to buy at !
iThemes, PluginBuddy, WebDesign.com
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The Beginnings of Ecommerce
When did online shopping begin?
1979
Michael Aldrich connected a modified home TV!
to a transaction processing computer over!
a telephone line in the UK.
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The Beginnings of Ecommerce
Another big year for ecommerce…
1994
Jeff Bezos starts Amazon
Netscape introduces SSL encryption
Pizza Hut introduces online ordering
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Amazon.com launched in 1994!
but didn’t turn a profit until…
2003
Last year the average Amazon order was over $47
Source: InternetRetailer.com on 6/26/2012
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Ecommerce Today
Ecommerce sales worldwide topped
$225B
in 2012
Source: InternetRetailer.com
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In the first quarter of 2013
$5,277
was transacted per second by
Source: PayPal.com
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The average consumer spends
$1200-$1300
shopping online every year.
Source: Forrester Research, Mashable Infographic 9/4/2012
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By 2016
15% more people
will be shopping online
(192 million in the U.S. alone)
Source: Forrester Research, Mashable Infographic 9/4/2012
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know this stuff!
If you are even moderately serious!
about designing web sites, you need to
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Ecommerce 101
The Standard Ecommerce Process
Ecommerce with Third Party Processor
Understanding SSL
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The Standard Ecommerce Process
Shopping
Cart
Payment
Gateway
Merchant
Account
Bank
Account
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Shopping Cart
The shopping cart’s job…
o manage the shopping process
o communicate with the
payment gateway
o keep the user happy
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Shopping Cart
Some Shopping Cart Options
for WordPress:
o Shopp
o Cart66
o WooCommerce
o Gravity Forms
o Easy Digital Downloads
o iThemes Exchange
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Get the Chart
!
nathaningram.com/ecommerce
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Payment Gateway
Similar to Point of Sale in a
retail store.
Authorizes payments for the
merchant and keeps a log of
authorized transactions.
Example: Authorize.net
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Payment Gateway
Payment Gateway Fees:
o A transaction fee (10¢*)
o A batch fee (25¢*)
o A monthly minimum fee ($20*)
* Current Authorize.net Fees
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Merchant Account
A bank account that receives
payments from a card issuer
Usually a separate company
than the Gateway
Works like a collection agent
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What Merchant Accounts Do
Acquiring Bank
(Merchant Account)
Issuing Bank!
(of the Credit Card)
Hey, one of your customers
made a purchase for $100.
OK, here’s the money
Sweet, thanks.
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Merchant Account
The Acquiring Bank
(merchant account) assumes
the risk for a transaction.
o Fraud
o Chargebacks
Why would they take this risk?
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Merchant Account
Oh Good, More Fees…
o Discount Rate (2-6%)
o Monthly Minimum Fee
o Customer Service Fee
o Annual Fee
o Chargeback Fee
!
Types and amounts vary widely between banks.
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Merchant Account
Application process can be
detailed and time consuming.
Secure merchant account
approval before constructing
the ecommerce platform.
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The Standard Ecommerce Process
Shopping
Cart
Payment
Gateway
Merchant
Account
Bank
Account
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Ecommerce with a Third Party Processor
Shopping
Cart
Third Party
Processor
Bank
Account
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Ecommerce with a Third Party Processor
Shopping
Cart
Third Party
Processor
Bank
Account
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Standard vs. Third Party Processors
Standard
Lower transaction fees
Looks more professional
Simple recurring billing
Quick automatic deposits
Requires SSL on site
Rigorous PCI Compliance
Complicated setup process
Third Party
Higher transaction fees
Can appear amateurish
More complicated recurring billing
Automatic deposits n/a or weekly
No SSL required
No (or simple) PCI compliance
Easy setup process
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The Many Flavors of
Standard
Accepts all major
credit cards!
and echecks
No monthly fee
Advanced
+ Customers!
pay without!
leaving your site
$5 monthly fee
Pro
+ Virtual terminal!
for phone
transactions
$30 monthly fee
Payflow Pro
Integrates PayPal!
with your current
merchant account
$25 monthly fee!
10¢ per transaction
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What to Consider!
when Choosing a Payment System
1. How much volume will you process?
2. Do you need to do recurring billing?
3. Where are you based?
4. Does the company have a good reputation?
5. What level of support will you receive?
6. Does the gateway integrate well?
7. Are there any hidden fees?
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Get the Chart
!
nathaningram.com/ecommerce
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What About Security?
Rule of Thumb:
A web page that collects sensitive
information from the user should be
secured with SSL.
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What About Security?
What is SSL?
SSL is a protocol that allows a
program on your computer to
establish a secure connection to a
remote server.
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How SSL Works
Web Server
Web Browser
Hey, I need a secure
connection.
Sure, no problem, here’s my
security certificate.
Sweet, thanks
VIghro' boneH vide'os vIneH
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Types of Certificates
Shared SSL
Offered free by many!
hosting companies.
Shared by all sites!
on a server.
URL is not your domain,!
can cause trust issues!
with users.
Domain Validated
Certifies you own your
domain name.
Usually issued within!
an hour or two.
Cheap
$20+ a year
Extended Validation
Certifies you own your
business and domain.
Can take a few days to!
a few weeks to issue
Green bar in browsers
$149+ a year
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Sources for Certificates
Y O U R W E B H O S T
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SSL and WordPress
WordPress HTTPS (SSL) Plugin
by Mike Ems
Available free from the WordPress Plugin Repository
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Nathan Ingram! @nathaningram
Ecommerce 101
41. @ n a t h a n i n g r a m
Coupon Code
wpyall25!
Good for 25% off anything you want to buy at !
iThemes, PluginBuddy, WebDesign.com
Notas del editor
Keep the user happy – a good cart stays out of the way as much as possible
* Retail – swipe card, POS contacts issuing bank to see if funds available, responds with approval or decline* Ecom – cart collects payment info, sends to gateway, contacts issuing bank, passes approval or decline back to cart which communicates with customerIf approved, issuing bank provides approval code, recorded by gateway for use in settlement processMost gateways offer a Virtual Terminal for manual transaction entry* Authorize.net is the largest and most popular gateway, many alternatives exist
Gateway is tracking list of approvals throughout day. Submits them in a group (batch) to merchant account for settlementFor their trouble, gateways charge fees… *
Merchant account does nothing until it receives a batch from the Gateway – previously authorized charges… like IOUs from issuing bank.* Merchant account is a bank service, * typically a different company than the Gateway (make sure the gateway you choose can talk to your merchant account)* Merchant account like a collections agent, contacts issuing banks to receive the promised payments (next slide visual)
A merchant account is provided by a bank… every time a transaction walks down hall of bank, fees tacked on by every cubical it passes.Discount Fee – 2-6% (divided betw merchant acct provider, gateway, and cc provider)Monthly Minimum – min amt if discount fees don’t exceedCS Fee / Statement Fees / Annual Fee (some of these can be negotiated)Chargeback Fee (customer challenges a charge on statement with their cc provider) - $15-$30 (sometimes whether successful or not)
Banks weigh risk of merchant before issuing them an account. Stringent process. Frequent denials.Be sure to get approval before site building… (freelancers make sure client has approval)
Summarize process
Combine the functions of the payment gateway and merchant account with a focus on convenience for the merchant.
Important because rarely connected directly to server that hosts site visiting.Data back and forth passes from comp to comp until destination. Possible for what sending/receiving to be viewed by someone along way. If credit card / sensitive info, this is a problem.Internet like a room full of people having conversation. Anyone can walk up and listen to your conversation with someone else.With SSL, that conversation is happening in a language that only the 2 people talking can understand.
Secure connection begins with browser initiating a “handshake” procedure. Requests security credentials from server.Server responds with certificate which includes name of server, who owns it, company info (dep on type) and encryption key.Could I please see some funny cat videos (Bing Klingon translator)
Last questions or comments?Next slide at end for coupon code reminder